Gujarat High Court
Sanghavi Organisers Private Limited vs Respondent(S) on 17 September, 2014
Author: N.V.Anjaria
Bench: N.V.Anjaria
O/COMP/58/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY PETITION NO. 58 of 2014
In
COMPANY APPLICATION NO. 61 of 2014
===========================================================
SANGHAVI ORGANISERS PRIVATE LIMITED....Petitioner(s)
Versus
.....Respondent(s)
================================================================
Appearance:
MRS SANGEETA N PAHWA, ADVOCATE for the Petitioner(s) No. 1
MR DEVANG VYAS, ADVOCATE for the Respondent(s) No. 1
================================================================
CORAM: HONOURABLE MR.JUSTICE N.V.ANJARIA
Date : 17/09/2014
ORAL ORDER
A Scheme of Arrangement in the nature of amalgamation of Skyvision Multitrade Private Limited with Sanghavi Organisers Private Limited, the petitioner herein is proposed and mooted.
2. The petitioner herein is a transferee company which has filed the present petition seeking sanction of this court for the said Scheme of Amalgamation under sections 391 to 394 and other relevant provisions of the Companies Act, 1956.
2.1 The transferor company named Skyvision Multitrade Private Limited has its registered office in the State of Maharashtra. It is stated that the transferor company has therefore taken out appropriate proceedings before the jurisdictional High Court being the High Court of Bombay.
3. The basic details of the petitioner company are Page 1 of 7 O/COMP/58/2014 ORDER as under.
3.1 The main objects of the company, as are suggested from copy of its Memorandum of Association annexed in the papers of the petition, are to carry on the business of construction and to act as promoters, organizers and agents of lands, estate, housing scheme, township; to carry on business of construction and to act as builders, contractors etc. 3.2 The petitioner company was incorporated on 27.11.2009 in the name of "Sanghavi Organisers Private Limited" and its registered office is situated at 5A, Anjan Shalakha Apartment, opp. Jain Temple, Lal Bungalow, Athvaline, Surat--395 007, which is the address shown in the cause-title.
3.3 The authorized share capital of the company as per the balance-sheet as on 31.03.2013 is Rs.7,60,00,000/- comprising of 1,00,000 equity shares of Rs.10/- each and 75,00,000 preference shares of Rs.10/- each. The issued, subscribed and paid up share capital of the company as per the balance-sheet as on 31.03.2013 is Rs.7,51,00,000/- comprising of 10,000 equity shares of Rs.10/- each and 75,00,000 preference shares of Rs.10/- each.
3.4 The Board of Directors of the petitioner company passed a resolution, approving the Scheme of Amalgamation.
4. Heard learned advocate Mr. Navin K. Pahwa for the petitioner company and learned Assistant Solicitor General Mr. Devang Vyas for the Central Government Page 2 of 7 O/COMP/58/2014 ORDER represented through the Regional Director.
5. It was pointed out that the petitioner-transferee company had filed Company Application No. 61 of 2014 and by virtue of order dated 04.03.2014 passed by this court in the said application, the requirement of holding of meeting of equity shareholders and preference shareholders was dispensed with in view of consent of all the equity and preference shareholders given to the proposed Scheme. The petitioner being transferee company, the holding of meeting of the creditors was not called for.
6. After undergoing the aforesaid legal and procedural requirement by the petitioner company, the present petition was filed and the Scheme of Amalgamation was placed for consideration before this Court with a prayer to sanction the same.
6.1 The present petition came to be admitted by this court by order dated 20.03.2014. Notice of hearing of the petition was published in the English newspaper "Indian Express" and "Gujarat Mitra", having circulation in Surat. The same was published on 03.04.2014 and the petitioner company filed affidavit regarding the said publication. The notice to the Central Government through the Regional Director was issued and was served.
6.2 One Shambhukumar Agrawal, the Regional Director, Ministry of Corporate Affairs, North-Western Region, filed its affidavit dated 25.07.2014, offering his observations and comments on the proposed Scheme. The Page 3 of 7 O/COMP/58/2014 ORDER petitioner company filed its reply-cum-clarification dated 12.09.2014 in response to the report of the Regional Director.
7. Proceeding to consider the observations and comments of the Regional Director and response/reply of the petitioner company, 7.1 The first observation of the Regional Director in paragraph-2(c) is as under:
"(c) That, the Deponent respectfully submits that Clause 11 of the Scheme, provides for Accounting Treatment of Assets, Liabilities and Reserves of the Transferor Company. The clause 11.3 of the scheme is as under:
"The difference in the value of the net assets of the Transferor Company as on Appointed Date and the consideration value determined pursuant to this Scheme and after giving effect of clause 11.12 and 11.2, shall be accounted for in the books of the Transferee Company by adjusting to Free Reserve By the Transferee Company as per the Pooling of interest method prescribed in Accounting Standard-14 issued by the Institute of Chartered Accountants of India."
It is observed from the aforesaid clause no.11.3 that it is not in accordance with the Page 4 of 7 O/COMP/58/2014 ORDER Accounting Standard-14 as required. As per the requirements of the AS-14 the excess of assets over liabilities should be credited to Capital Reserve Account and the shortfall, if any, should be debited to the Goodwill Account and the Capital Reserve Account shall not treated as free reserve. Whereas the petitioner company proposes that the Capital Reserve Account shall be treated as free reserve. The Hon'ble Court may therefore be pleased to direct the petitioner company to comply with the requirements of Accounting Standard-14 and ensure that the excess of assets over liabilities shall be credited to Capital Reserve Account and the petitioner company to give undertaking that reserves so created, if any, shall not be available for distribution of dividend and also the petitioner company to comply with AS-14 and amend the relevant clause of the scheme accordingly."
7.1.1 In this regard by filing the aforesaid affidavit dated 12.09.2014, the petitioner company has submitted that under Accounting Standard 14, the creation of free reserve is not barred. It is further stated that even otherwise, the company is under obligation to make all the disclosures in its financial statements as enumerated under section 211(3B) of the Companies Act.
7.2 The second observation is with regard to compliance by the petitioner company in respect of the requirements of the Income Tax Department. The Page 5 of 7 O/COMP/58/2014 ORDER Regional Director stated that it addressed letter dated 21.04.2014 inviting specific comments from the Income Tax Department and the objections if any in relation to the proposed Scheme, but no reply is received from the Income Tax Department.
7.2.1 In this connection, the company has stated on affidavit that it undertakes to comply with the Income Tax Act and the Rules and the requirements of Income Tax Department in that regard.
8. Thus, the queries, comments and observations of the Regional Director with regard to the Scheme under consideration and the other requirements in law have been satisfied. The petitioner company is hereby directed to abide by the undertakings and commitments given as above.
9. The Regional Director in his affidavit stated that there are no complaints against the petitioner company including any complaint/representation in respect of the proposed Scheme. It is also stated that the Regional Director has no other objection except the observations and comments mentioned above.
9.1 It is also opined by the Regional Director that the Scheme is not prejudicial to the shareholders or the public at large in any way.
9.2 The amalgamation is expected to bring about better utilization of resources, profitable use of assets and properties with higher returns on capital which would in larger commercial and public interest.
Page 6 of 7O/COMP/58/2014 ORDER 10. From the facts and aspects manifested
hereinabove, the court is satisfied that the prayer for sanctioning the proposed Scheme of Arrangement in the nature of amalgamation deserves to be granted.
11. Accordingly, the prayer in the petition is granted and the Scheme of Arrangement in the nature of amalgamation of Skyvision Multitrade Private Limited with Sanghavi Organisers Private Limited, the petitioner herein is hereby accorded sanction.
12. It is further ordered that as required under Section 396-A of the Companies Act, 1956, the transferor company shall not dispose of or destroy its books of accounts and other connected papers without the prior consent of the Central Government and shall preserve the same.
13. The petitioner company shall pay fees of Rs.07,500/-(Rupees Seven Thousand Five Hundred Only) in the petition to learned advocate for Central Government by drawing Pay Order/Account Payee Cheque in the name of learned advocate. The Official Liquidator shall be paid Rs.07,500/- (Rupees Seven Thousand Five Hundred Only) by the petitioner towards his charges/cost of Report.
14. The petition is allowed and disposed of accordingly.
(N.V.ANJARIA, J.) chandrashekhar Page 7 of 7